SEBI Circular - Enhanced disclosure in case of listed debt securities

On May 27, 2019, the Securities and Exchange Board of India (“SEBI”) issued a circular on ‘Enhanced disclosure in case of listed debt securities’. The following guidelines have been issued by SEBI vide the said circular Disclosure of compensation arrangement with clients by debenture trustees on their websites Debenture trustees are required to disclose the nature of compensation arrangement with its clients on their websites, including the minimum fee to be charged (in absolute terms or as a%age of the issue size) and factors determining the same. Calendar of interest/ redemptions, due and paid, to be displayed on the website of DT(s) for the financial year. a. Debenture trustees are required to display on their website the ISIN wise details of interest/ redemption due to the debenture holders in respect of all issues during a financial year within 5 (five) working days of start of financial year, and also update the same in relation to any new issues. b. Debenture trustees are also required to update the status of payment ISIN-wise against such issuers not later than 1 (one) day from the due date. In case of delay in payment by the issuer, debenture trustees are required to update the calendar specifying the date of such payment, with a remark ‘delayed payment’. Furnishing of updated list of debenture holders to the debenture trustees by issuers/ registrars to an issue and share transfer agent (RTA) RTA / issuers shall henceforth be required to forward the details of debenture holders to the debenture trustees at the time of allotment and thereafter by the seventh working day of every next month in order to enable debenture trustees to keep their records updated and to communicate effectively with the debenture holders, especially in situations where events of default are triggered. Additional covenants in case of privately placed issues In privately placed issues, the following additional covenants must be included as part of the issue details in the summary term sheet, as per the agreement between the issuer and investor a. Default in payment In case of default in payment of interest and/or principal redemption on the due dates, additional interest of at least 2% (two%) p.a. over the coupon rate shall be payable by the company for the defaulting period. b. Delay in listing In case of delay in listing of the debt securities beyond 20 (twenty) days from the deemed date of allotment, the company shall pay penal interest of at least 1% (one%) p.a. over the coupon rate from the expiry of 30 (thirty) days from the deemed date of allotment till the listing of such debt securities to the investor. Amendments may be made to incorporate the aforesaid additional covenants in the summary term sheet issued and/or agreement executed on or after May 7, 2019.